Business

How Enam AMC’s Jiten Doshi chooses stocks

Enam Asset Management Pvt. Ltd (Enam AMC) will complete 25 years in October. The asset manager has a unique investment philosophy distributed across three platforms: Enam India Core Equity Portfolio, Investment Portfolio Enam India Diversified Equity Investment and Enam India Stock Portfolio. For the next phase of growth, the company is planning to launch three new products, another portfolio management service (PMS) product, an alternative investment fund (AIF) and an Investment Commitment. collective investment in negotiable securities (UCITS) to target the retail industry and the mid-market segment.

Jiten Doshi, co-founder and chief investment officer of Enam AMC, spoke with Mint about the company’s future plans, market prospects and India’s growth story. Edited excerpts:

Take us through the history of Enam AMC.

We are the asset management arm of the Enam Group. We will complete 25 years on October 3 of this year. We have the longest serving manager track record and we manage over $3.4 billion in assets. We have local PMS, offshore fund and SMA platform for large institutional investors looking to invest in India. We have pioneered Socially Responsible Investing in India. In fact, we have signed the United Nations Principles for Responsible Investment (UN PRI).

What strategies do you have at Enam AMC?

We have a unique strategy, which is growth-oriented. We have seen nearly all market cycles, starting in 2001. We have a long-term track record of delivering a CAGR of over 20% in all market cycles with around 5% Alpha.

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Can you tell us how you are positioned during the covid crisis?

A pandemic is something new to the world, and some businesses have taken a huge hit as they undergo a structural change. During this period, I think many industries, especially service-oriented ones, have been seriously challenged. We have also experienced several downturns in various industries. During those periods, we’ve seen some portfolio shifts, and I think we’ve positioned the portfolio for a major economic bounce. During 2019-20 the Indian economy slowed down but in 2020 we could feel a strong recovery by the end of March 2021. So that’s when we reposition our portfolio to engage in growth across home improvement, consumer discretionary, staples and many other industries where we find more value and high growth .

In terms of customers, you’re not actively expanding. Has that changed over time?

On the current platform, our average ticket size exceeds 5 crore, which is one of the highest in the industry. It’s a very specialized service where we take a customized portfolio approach to our clients. So on current platforms we don’t really believe in volume expansion, but in increasing AUM per customer. So that’s what we’re focusing on. We are about to enter the mid-range market segment with 50,000 PMS ticket size will be launched later this year to ensure wider participation from investors nationwide. Now we want to offer something where we can encourage participation from the retail and mid-market segments.

What is your cost structure in terms of performance and management fees?

Our management fees range from 1.5% to 2.5%, depending on the product. And of course, we have special rates for big ticket private managed account (SMA) requirements that we discuss directly with our customers. We are the most PMS friendly as we do not charge any performance fees; we don’t have any lock period and load in or out.

Can you introduce us to the investment philosophy you follow when picking stocks?

We look for businesses that are well positioned to take advantage of emerging growth opportunities across the country. We look for businesses with high barriers to entry, something that allows businesses to sustain earnings growth and offers greater predictability and durability in the business model. In addition, these businesses should be run by high-quality regulatory bodies that adhere to the best standards of corporate governance, disclosure and transparency.

Historically, has India traded at higher prices than other emerging markets? Do you think it will sustain?

I don’t think we’re making a similar comparison when you compare India with, say, Brazil or Russia or South Africa. India has a lot of high quality companies in all fields. Obviously, India will trade at a premium for a mostly commodities market, which is devoid of high-quality companies. The Indian markets in terms of ownership, governance and transparency, are ahead of many other emerging markets.

India deserves the highest ratings for these markets, as most of the businesses here generate very good return on capital employed (ROCE).

Are there specific areas where you are optimistic?

We are bullish on the financial services sector, which is primarily comprised of all private sector banks, NBFCs and general insurance. We are also optimistic about home improvement and discretionary consumption. The sectors that we fundamentally believe may experience stress in the coming period will be commodity sectors such as metals and oil and gas.

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